Ones to Watch | By Sabrina Davis

You might expect a 46-unit chain to lose some identity after merging with a company 22
times its size, especially when the company is Panera Bread,
the fast-growing bakery café powerhouse.

Au contraire says Paradise Bakery &
Café President David Birzon. “We still see
ourselves as the bakery-café leader in terms of quality.
Before becoming involved with Panera, we would describe
ourselves as an upscale version of Panera. We’ve always
thought our baby was a little bit better looking.”

The two chains that were once competitors,
when Panera was eyeing Paradise’s home market in Arizona,
became teammates in February 2007 when Panera purchased a 51
percent interest in the Scottsdale-based Paradise Bakery &
Café. Paradise’s role in the partnership is to
help Panera become a small-market regional player.

“Panera runs off a commissary system
to supply fresh dough to its facilities, so it has to have a
large market to make investment in a commissary
worthwhile.” Birzon explains. “We don’t put
in a commissary until we have 12 stores or so in an
area.”

Paradise prepares all its dough in its
stores from scratch. Once a market grows to 12 stores, Paradise
uses a commissary to take over bread production only.
“There’s a great synergy between our companies in
that we give them the opportunity to compete in smaller
markets, too.”

The companies also are experimenting with
the old adage that there’s no better competitor than
oneself. “In Indianapolis we’re growing the
concepts side by side,” Birzon says. “We’re
really using that as a test market to see how the concepts work
and compete together. We’re finding that the concepts are
different enough that the guests are getting two different
experiences and visiting us both in the same week.”

Paradise’s history is part of what
makes it special. It started as Cookie Muncher’s Paradise
in 1976, offering three types of cookies, muffins, and
fresh-squeezed lemonade. By 1979 the menu had expanded to
include soups, salads, sandwiches, and other bakery items. The
company is still well known for its sweet treats, and few
customers pass through the cafeteria-style line without picking
up dessert.

The history and customer following might
be one reason Panera plans to keep Paradise running as a
separate entity even after the likely purchase of the remaining
49 percent of the company in December 2008. For the other
reason, just look at the bottom line, Birzon says. “Our
street locations, which are the core of our business, do an
average of $60,000 per week in each store with an average check
upwards of $11. That’s just phenomenal in this
market.” Panera’s average weekly per-store sales
are roughly $40,000 with an average check of $8 to $9.